Let us begin with a simple but vitally important proposition: Government in America was never supposed to engage in the multitude of activities that it does today.
When the United States gained its independence more than 200 years ago, the founding fathers envisioned a national government with explicit and restricted responsibilities. These responsibilities pertained mainly to protecting the security of the nation and ensuring “domestic tranquility,” which meant preserving public safety. Especially in the realm of domestic affairs the founders foresaw very limited government interference in the daily lives of its citizens. The founders did not create a Department of Commerce, a Department of Education, or a Department of Housing and Urban Development. This was not an oversight: They simply never imagined that the national government would take an active role in such activities.
The minimal government involvement in the domestic economy would be funded and delivered at the state and local levels. Even that involvement was to be restricted by Congress’ authority over interstate commerce, an authority granted to Congress by the founders for the purpose of preventing the state governments from interfering with commerce.
Recognizing the propensity of governments to grow, the people added the Bill of Rights to the Constitution as an additional layer of protection for the rights of individuals against the state. The Bill of Rights was to ensure that government would never grow so large that it could trample on the individual and economic liberties of American citizens. These liberties are eroding. The United States has been gradually transformed from a nation with almost no government presence in the marketplace to one in which the government is now the predominant actor in the domestic economy. Consider the following:
• There are now more Americans employed by government than by the entire manufacturing sector in America.
• In the past 25 years the federal government has spent $2.5 trillion on welfare and aid to cities. This is enough money to purchase all of the assets of the Fortune 500 companies plus all of the farmland in the United States.
• In 1987 U.S. farmers received more money in government subsidies than they did in selling their crops in the marketplace. In short, farmers now produce for the government, not for U.S. consumers.
• In three states today—California, Maine, and New York—almost half of all middle-income family wages are captured by government through income, payroll, property, and sales taxes, and other levies.
• The federal government spent $16 per person in 1800, $27 per person in 1850, $109 per person in 1900, $1,544 per person in 1950, and $4,760 per person in 1990.
Why is the American public not rising up in protest? The answer seems to be that the growth of government has been sufficiently gradual over the past 50 to 100 years that most Americans today probably believe that this is the way government in America ought to act and has always acted.
Both of these contentions are wrong. Government has not always, and ought not, act as it does now. The following sections demonstrate with the aid of graphs and figures how government has grown over our nation’s history. We examine federal, state, and local government growth in five areas: expenditures, taxes, debt, welfare and transfer payments, and employment. (Bear in mind, this does not include the cost of back door spending, such as mandates and regulations. If they were included here, the cost of the federal government per person today would easily exceed $10,000.)
• In 1930 workers paid one of every eight dollars of them income in taxes.
• In 1950 workers paid one of every four dollars of their income in taxes.
• In 1992 workers paid one of every three dollars of their income in taxes.
• In 1900 state and local governments raised none of their revenues through income taxes.
• In 1960 state and local governments raised 10 percent of their revenues through income taxes.
• In 1992 state and local governments raised 26 percent of their revenues through income taxes.
• The first Social Security payroll tax rate, which was in place from 1937 to 1950, was 2 percent.
• By 1970, after the introduction of Medicare and the hospital insurance tax, the payroll tax rate was 9.6 percent.
• By 1980 the rate was 12.3 percent.
• By 1990 the rate was 15.3 percent.
Originally Posted by Lee Chowaniec
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